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People hearing the term, “estate planning” or even “legacy planning,” often wince, squirm, and cringe unless they are within a very fortunate  income tax bracket. However, not one to be deterred, when I receive the rolling eyes or blank stare, I reach into my “unraveling legalese” briefcase and offer the following clarification:

  • Your “estate” is anything you own. It doesn’t have to be a million-dollar home or a 1967 Aston Martin. It can include the 150 classic jazz LPs that belonged to your father, your grandmother’s wedding ring, or you and your spouse’s stubs to the Blackhawks 2010 championship. The goodwill created in your small business is also part of your estate, your legacy. Additionally, included are contracts in which you’ve assigned rights to be effectuated at a certain time, i.e., life insurance. Note, however, that though life insurance is a component of your entire estate, it is not part of your probate estate.
  • Estate planning is the process by which everything you own and will likely own or inherit, as well as your liabilities and obligations, is considered to determine how best to transfer your possessions to your heirs and/or intended beneficiaries. If you own a home, a retirement account, life insurance, have one or more dependents and a dog, deciding on who gets what and why is the process of estate planning.
  • Estate planning is not limited to considering how beneficiaries can inherit tax-free or how one can use the current state and federal tax laws to the advantage of your living trust beneficiaries. Estate planning also includes anticipating scenarios such as ensuring that the needs of dependents or a partner with special challenges is provided for and providing for special beneficiaries who may not yet be born.

Hence, estate planning is just planning for your future. It is not a tool merely for the wealthy; estate planning is a tool for the wise.

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